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Tepal Project

Tepal Project
Summary
Location: The Tepal Project is located in Michoacan State, Mexico. The project is 70 kilometres west of Apatzigán and 170 kilometres south of Guadalajara, one of the largest cities in Mexico.
Deposit Type: Copper-gold porphyry with silver and molybdenum values.
Communities: The town of Tepalcatepec in 15.5 kilometers from the property.
Infrastructure: Access and infrastructure are excellent, with paved roads, deep sea port access, and low topographical relief.
Properties: The Tepal Project is comprised of five concessions totalling approximately 1,400 hectares (138 square kilometres).
Ownership: Geologix has acquired a 100% interest in the Tepal Property by way of an Option to Purchase Agreement with Arian Silver Corp.
Royalties: 2.5% NSR payable to Minera Tepal S.A. de C.V. Geologix has a Right of First Refusal on the purchase of the NSR.
Latest News

October 2013 - Geologix Provides Operational Update

July 2013 - Statement Of Tepal Cash Costs To New World Gold Council Standards And Current Metals Price Volatility

March 2013 - Geologix releases positive Prefeasibility Study that states pre-production capital costs for the Tepal Project are estimated to be $354 million. Study also states that the Project's estimated post-tax NPV, at a 5% discount, is $421 million, with an IRR of 28%.

February 2013 - Geologix releases results of alternative process procedure evaluation, indicating the potential to increase overall gold recoveries in the sulphide mill design by 16.4% to 79.2%, and silver recoveries by 31.4% to 52.9%, compared to the April 2011 Preliminary Assessment Study


Tepal Project Overview

Since acquiring the Tepal project in late 2009, Geologix has carried out aggressive exploration, resource expansion, and infill drilling programs through to the end of 2011, totaling 56,810 metres of drilling in 292 holes. This drilling has allowed the Company to achieve significant increases in resources for both the North and South Zones, to add the resources of the Tizate Zone and to place a high percentage of mineral resources from all of the zones into the Measured and Indicated categories. The Company also completed a Preliminary Economic Assessment ("PEA") in October 2010 and a Preliminary Assessment ("PA") in April 2011. The largest drilling program, in 2011, consisting of 41,284 metres of drilling in 215 holes, allowed for the most recent resource estimate for the project, which was prepared by Micon International Ltd. The estimate was released in March 2012, and included all project drilling data from the North, South, and Tizate zones up to December 2011.

In March 2013, the Company announced the positive results of a Pre-Feasibility Study ("PFS") prepared by JDS Energy & Mining Inc. The results were based on the March 2012 Micon resource report.

A link to the full March 2013 Tepal PFS report is provided on the website home page.

Significant highlights of the March 2013 PFS and mine plan include:
  • The Project's estimated post-tax NPV, at a 5% discount, is $421 million with an IRR of 28%.
  • The Project's estimated pre-tax NPV, at a 0% discount, is $925 million with an IRR of 36%
  • The Project's estimated payback period is 2.7 years pre-tax and 3.2 years post-tax.
  • Pre-production capital costs for the Project are estimated to be $354 million.
  • The Project is expected to produce an average of 117,000 ounces of gold and 49 million pounds of copper annually over its initial seven years of operation.
  • The Project has an estimated mine life of 11.5 years, and an average milling rate of 38,700 tonnes per day.
  • Life of mine all-in sustaining cash costs of production, net of by-product credits, as per World Gold Council Standards are estimated to be $290/oz. for gold or $0.89/lb. for copper.
Complete details of the PFS are available in the Company's news release dated March 19, 2013.

Resource Estimation Details

Results from the update resource estimate are as follows:

Updated Total Tepal Project Resource Estimate1 - March 2012
Category
Tonnes (t)
Au (g/t)
Cu (%)
Ag (g/t)
Mo (%)
Au (oz.)
Cu (lbs)
AuEq2 (oz.)
Measured
34,100,000
0.48
0.25
0.95
0.002
528,000
185,000,000
1,037,000
Indicated
153,700,000
0.26
0.19
1.67
0.004
1,276,000
628,000,000
3,003,000
Meas & Ind
187,800,000
0.30
0.20
1.54
0.004
1,804,000
813,000,000
4,040,000
Inferred
35,700,000 
0.16
0.15
1.68
0.006
182,000
120,000,000
512,000
Au = gold, Cu = copper, Ag = silver, Mo = molybdenum, g/t = grams per tonne, % = percent, oz. = ounces, lbs. = pounds,
1The in situ resource stated in the table conforms to CIM guidelines for reasonable potential for economic extraction and is not to be confused as reserves. Resource numbers above are rounded to nearest 100,000 tonnes, 1,000 oz Au, 1,000,000 lbs Cu and 1,000 oz. AuEq
2AuEq = gold equivalent and is calculated using gold and copper only using $1000 Au, $2.75 Cu metal prices (AuEq = (lbs. Cu*$2.75/$1000) + Au oz.). All dollar values stated are $USD.


For comparison with the March 2011 resource estimate please see the Company's March 16, 2011 News Release at www.geologix.ca.

The March 2012 resource estimate now includes results for Ag and Mo in the Tepal North and South Zones which were not consistently assayed in historic drill programs. Infill drilling and the re-assaying of 1688 historic pulps supplied sufficient data to permit Ag and Mo to be estimated for these zones.

The resources for the three main zones are shown in the tables below.

North Zone - Resource Estimate1 - March 2012
Category
Tonnes
Au (g/t)
Cu (%)
Ag (g/t)
Mo (%)
Au (oz)
Cu (lbs)
AuEq2 (oz)
Measured
14,100,000
0.50
0.29
0.78
0.002
228,000
89,000,000
473,000
Indicated
55,300,000
0.30
0.21
1.01
0.002
533,000
252,000,000
1,226,000
Meas & Ind
69,400,000
0.34
0.22
0.96
0.002
761,000
341,000,000
1,699,000
Inferred
900,000
0.22
0.21
1.21
0.003
7,000
4,000,000
18,000


South Zone - Resource Estimate1 - March 2012
Category
Tonnes
Au (g/t)
Cu (%)
Ag (g/t)
Mo (%)
Au (oz)
Cu (lbs)
AuEq2 (oz)
Measured
20,000,000
0.47
0.22
1.07
0.002
300,000
96,000,000
564,000
Indicated
21,000,000
0.45
0.20
1.17
0.002
305,000
91,000,000
555,000
Meas & Ind
41,000,000
0.46
0.21
1.12
0.002
605,000
187,000,000
1,119,000
Inferred
400,000
0.40
0.16
0.95
0.002
5,000
2,000,000
11,000


Below the South Zone pit shell, indicated and inferred material has been identified that has not had economic parameters applied and is not included in the resource estimate. This material totals 4.8 million tonnes grading 0.57 g/t Au, 0.27 % Cu, 1.12 g/t Ag and 0.003% Mo at a $20.00 equivalent cut-off which is considered a preliminary suitable equivalent value that could potentially give a reasonable prospect for economic extraction. However, an underground economic study needs to be completed to identify the appropriate cut-off. The material remains open in several directions and requires further drilling to identify size, grade and reasonable economic potential for inclusion into stated mineral resources.

Tizate Zone - Resource Estimate1 - March 2012
Category
Tonnes
Au (g/t)
Cu (%)
Ag (g/t)
Mo (%)
Au (oz)
Cu (lbs)
AuEq2 (oz)
Indicated
77,400,000
0.18
0.17
2.29
0.006
438,000 
285,000,000
1,222,000
Inferred
34,400,000
0.15
0.15
1.70
0.007
170,000
115,000,000
486,000


Oxide and Sulphide Resources1 - March 2012
Category
Tonnes (t)
Au (g/t)
Cu (%)
Ag (g/t)
Mo (%)
Au (oz)
Cu (lbs)
AuEq2 (oz)
Oxide Meas & Ind
21,100,000
0.34
0.21
1.18
0.002
233,000
96,000,000
497,000
Oxide Inferred
700,000
0.19
0.13
2.01
0.002
4,000
2,000,000
10,000
Sulphide Meas & Ind
166,700,000
0.29
0.20
1.59
0.004
1,571,000
717,000,000
3,543,000
Sulphide Inferred
35,000,000
0.16
0.15
1.67
0.007
177,000
118,000,000
502,000


The mineral resources were estimated using Datamine Studio V3 mining software. Grades for Au, Cu, Ag and Mo were interpolated by ordinary kriging into blocks that are 10 metres by 10 metres by 5 metres in height representing the mineralized envelopes. Grades were estimated inside the mineralized envelopes based on an $8.70 equivalent cut-off calculated using a $1000 gold price and $2.75 copper price, designed by Geologix and validated by Micon. Mineral resources were further constrained within a Whittle resource pit shell based on $1,300 Au/oz and $3.30/lb for Cu (Ag and Mo values were not included) and reported above a $5.00 economic cut-off. The Whittle pit shell constraints utilized the following parameters:

Metallurgical Recoveries
North and South Zones Oxide: 78.4% Au, Cu 14.3%  - Sulphide 60.7% Au, 87.4% Cu
Tizate Oxide: 68.8% Au, Cu 6.8%  - Sulphide 66.2% Au, 85.3% Cu
Metals Used and Metal Prices ($USD)
Gold, Copper $1300 Au, $3.30 Cu
Operational Constraints
Pit Slope Angle 45 degrees
Operating Cost (Oxide and Sulphide) Mining:$1.35/t, Processing: $4.30/t, G&A: $0.68/t


All assays were composited to a 2 metre length prior to block estimation, and composite grades were evaluated for outliers. After evaluation, capping was applied to both oxide and sulphide mineralization for Au, Cu, Ag and Mo, where needed. The blocks were interpolated in three successive passes with each pass having a larger search volume. Search radii were designed from variogram parameters and local drill spacing. For the North and South zones interpolation passes one and two correspond to a classification of Measured and Indicated respectively and required at least five samples representing at least two drill holes. The remaining blocks within the North and South zone resource solids were interpolated with a third pass, which required at least 4 samples from at least one hole and were classified as Inferred. The Tizate zone was interpolated in two passes. The first required at least five samples representing at least two drill holes for a classification of Indicated, the second required at least 4 samples from at least one hole for a classification of Inferred.

The resource estimate was completed by David Makepeace, M.Eng., P. Eng., Senior Geologist, of Micon International Ltd., Vancouver, B.C. and is based on geological interpretation supplied by the Company to Micon. Mr. Makepeace is an 'independent qualified person' for the purposes of National Instrument 43-101 Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators and has verified the data disclosed in this news release. The Company's Resource Geologist, Andrew Hamilton, B.Sc., P. Geo., a 'qualified person' for the purposes of NI 43-101, has approved the disclosure contained in this news release.

Terms of the Purchase Transaction:

On September 24, 2009 the Company and Arian Silver Corp. ("Arian") entered into a letter agreement which was followed up by a definitive agreement whereby the Company was granted the exclusive rights to purchase Arian's 100% interest in the Tepal Gold-Copper Project in the state of Michoacán, Mexico. Under the terms of the agreement, the Company completed the purchase of 100% of the property, by delivering to Arian US$3.0 million in staged payments.

The Company also assumed the balance of Arian's obligations under the terms of an underlying property option agreement with Minera Tepal SA de CV ("Minera Tepal") subject to a 2.5% NSR and has completed staged payments to the underlying property vendor of US$ 3,200,000. Under the terms of the NSR agreement, Geologix has a right of first refusal to purchase the NSR from Mineral Tepal.

Maps and Figures

Click to enlarge

Tepal 5000 Drill Hole Plan

Tepal 5000 Geology Plan

Tepal 25000 Claim Map

Tepal Location Map Michoacan State

Tepal PFS Site Layout

Technical Reports

JDS Energy and Mining Inc. PFS - May 2013

Click Here
MICON Resource
March 2012

Click Here
SRK PA
March 2011

Click Here
SRK PEA
October 2010

Click Here